Archive for the ‘Research’ Category

This is a quick guide to postings I have made in the past. These and other postings are listed in the right hand column segment called “popular posts.” You will find even more information if you go to the hyperlinks in each of these postings.
Go here to find estimates of the number of illegal workers by state and their share of the state’s workforce. Data drawn in part from the Pew Hispanic Center.
Go here to find federal government estimates of illegal immigrants, by country of origin and by when they arrived in the U.S.
Go here to find recent research findings on the impact of all immigrant as well as illegal immigrant labor on native born American wages.
And here for types of work performed by illegal immigrants and other data on these workers, from the Pew Hispanic Center.

Technology advances proceed apace while America is outsourcing jobs to developing countries. These two forces combine to increase the level of migration in the world. Much of this migration is into the U.S. by far the biggest in-migration country in the world. The net effect of this cycle is to improve middle class lives in the U.S. but worsen work prospects for poorly educated Americans.
Robert Feenstra of U.C. at Davis, who has long been a student of economic productivity, made a presentation on “Globalization and its Impact on Labor.” He goes a long way to describing the overwhelming power of forces behind the growth of low wage immigrant labor (including illegal labor) in the United States.
The essence of Feenstra’s story, leavened with information he does not include, is this:
Manufacturing labor in both the U.S. and Mexico have not benefited in the past 10-15 years even while the service workforce has benefited, by capturing the lion’s share of increases in the compensation pie.
This is in part because manufacturing growth in Mexico, expected due to NAFTA, failed to take place except in isolated areas like along the American border (Manquiladora). Thus good manufacturing jobs were not available at anywhere near the numbers needed for the ocuntry’s work population. In part, a disproportionate share of economic gains went to service, not manufacturing jobs. The manufacturing sector was also hurt by American and Chinese competition.
Relatively disadvantaged workers in both countries have been making hard decisions on where or if to work. With economic distances expanding between workforce segments, making catch-up less probable, choices narrow down to if and where to migrate.
Mexicans, especially those at the lower end of that country’s education scale, have little prospects of rewards in Mexico and have come to the U.S. to, in effect, make middle class life more comfortable for Americans. Poorly educated American workers have been withdrawing at increasing rates from the workforce, either into part time work, idleness or disability pensions.
Here in the style of Powerpoint bullets, is the story:
One, technology is concentrating economic rewards in the service sector workforce and leaving production (i.e. manufacturing) stagnant. This is happening in developed as well as developing countries – The U.S. as well as Mexico. In the U.S. service workforce relative wages compared to manufacturing wages grew strongly since the mid 1980s.
Two, production jobs in the U.S. are being off-shored and an increasing number of service jobs as well. The next effect is the increase the average compensation of better educated services workers – in both the U.S. AND in the countries providing the off-shored labor.
Three, this offshoring has been responsible for about 1% of the 2.5% – 4% annual productivity growth in the U.S. economy. This is a big deal.
Fourth, in Mexico manufacturing worker wages have not grown appreciatively with NAFTA, which was supposed to set off an economic boom. Feenstra does not discuss farm workers in Mexico, but one gets the impression that both farm and manufacturing wages in Mexico have lagged.
Fifth, there has been a huge transborder shift of workers at the lower end of the wage and education scale.
Mexican labor has moved into the U.S. just as the most vulnerable American workers have been withdrawing from the American workforce. Not addressed by Feenstra, the labor force participation of poorly educated blacks is very low.
Some 70% of the American workforce with less than 8 years of education are foreign born, and 22% of the workforce with 8 to 11 year’ education.
And American workers are heading out the door. The SSDI (disabled worker insurance program) of the U.S. has been growing – very sharply in the past few years. Those exiting the labor market for federal disability pensions are largely manufacturing workers with limited education. In 1995, there were 1.1 million SSDI awards made. In 2004, there were 2.2 million made.
The European Union has sought from the beginning to stem migration from poorer new members by systmatically suppprting infrastructure and manaufacturing growth in the new members.
See Feenstra here.

Here are important research data on the impact of how foreign born workers hurt some and help other Americans in wages. Note that these figures pertain only to wage impact. They do not address the lower costs of goods and services and greater corporate productivity which immigration and its companion free trade bring
POORLY EDUCATED WORKERS
Ten percent of U.S. born workers have less than a 12 years’ education. Foreign born workers make up 70% of all workers with less than 9th grade education, and 22% of workers with 8-11 years’ education. In these education categories, foreign born workers MARKEDLY DEPRESS wages by about 4%.
HIGH SCHOOL GRADS and “SOME COLLEGE” EDUCATED WORKERS
Eighty percent of U.S. born workers have between 12 and 16 years’ education. Foreign born workers make up 13% of the HS graduate workforce and 10% of the some college work force. (13% of all workers with HS degree, 10% with some college, and about 15% with college degree.)
For the HS graduate and some college workforces, foreign born workers SLIGHTLY INCREASE wages very slightly, by about 1% – 2%
COLLEGE AND MORE EDUCATED WORKERS
Ten percent of U.S. born workers have masters, professional or doctoral degrees. Foreign born workers make up 15%, 18% and 30% of these workforce categories, respectivelly. These foreign born workers MARGINALLY DEPRESS wages, by about 0.2%.
ILLEGAL IMMIGRANTS
About 4.9% of the American workforce is made up of illegal workers. Few of them have a HS degree or higher education. They GREATLY DEPRESS wages for all workers with less than a HS degree – by 8% — and MARGINALLY INCREASE the wages of the more highly educated workforce – by about 1%.
The data come from Table 5 and Figure 8 of a 2/8/07 presentation by Robert Feenstra of U.C. at Davis. he draws from research by Gianmarco Ottaviano and Giovanni Peri, about whom I have posted.

Posted in Economics, Research | Comments Off on Immigration’s impact on American wages by educational level of workforce

Let’s call this the Home Depot Effect: poorly educated workers compete for jobs, and benefit better educated workers by lowering the cost of goods while stimulating middle class growth.
Following is the abstract of a paper written in 2005 by Gianmarco Ottaviano and Giovanne Peri for the Centre for Economic Policy Research Discussion Paper No. 5226, 2005, (alternative version National Bureau of Economic Research Working Paper No. 11672, 2005: “Rethinking the gains from immigration: theory and evidence from the U.S.”
Recent influential empirical work has emphasized the negative impact immigrants have on the wages of US-born workers, arguing that immigration harms less educated American workers in particular and all US-born workers in general. Because US and foreign-born workers belong to different skill groups that are imperfectly substitutable, one needs to articulate a production function that aggregates different types of labor (and accounts for complementarity and substitution effects) in order to calculate the various effects of immigrant labor on US-born labor.
We introduce such a production function, making the crucial assumption that US and foreign-born workers with similar education and experience levels may nevertheless be imperfectly substitutable, and allowing for endogenous capital accumulation.
This function successfully accounts for the negative impact of the relative skill levels of immigrants on the relative wages of US workers. However, contrary to the findings of previous literature, overall immigration generates a large positive effect on the average wages of US-born workers. We show evidence of this positive effect by estimating the impact of immigration on both average wages and housing values across US metropolitan areas (1970-2000). We also reproduce this positive effect by simulating the behavior of average wages and housing prices in an open city-economy, with optimizing US-born agents who respond to an inflow of foreign-born workers of the size and composition comparable to the immigration of the 1990s.

Posted in Economics, Research | Comments Off on Poorly educated immigrant workers hurt, help American workers: 2005 study

A study of New Jersey asserts that illegal immigrants cost taxpayers $2.1 Billion. A Texas study last year asserted that the burden on taxpayers was $1.2 Billion. New Jersey’s total population is 8.4 million and it estimates its illegal immigrant population at 372,000. Texas in contrast has 20.8 million people of which 1.4 million are estimated to be illegal immigrants. How can New Jersey have almost double the taxpayer burden with less than 40% of the population of illegal immigrants?
And consider this: the New Jersey study authors say it is irrelevant what the contribution of illegal workers make in payroll taxes (yes, many pay payroll taxes) and consumer taxes. Why? Because for every illegal worker there is a legal American sitting on a bench ready to take the job if vacated! This is like saying that the taxpayer burden of red headed left handed persons is so many millions, and it doesn’t matter how much they pay in various taxes. Nor do the authors address a more important question, a step up in complication: what illegal immigrants add to the gross state product. Talk about one-sided accounting!
Per the Pew Hispanic estimates (you will find them on the right column under “undocumented workers by state”) there are 256,000 illegal workers in New Jersey and 1.024 million in Texas (2005 figures).
Go here for the Texas study, which I posted on in December.
The New Jersey study estimates these burdens on taxpayers: schools, $1.85 billion; healthcare $200 million; incarceration, $50 million. The Texas study has these comparable figures: schools, $967 million; healthcare $58 million; incarceration, $130 million.
The Texas study estimates that illegal households pay $867 million in consumption taxes and, per their rental or owned residences, $582 million in property taxes. With other payments, total payments by illegal immigrants into the public fisc are estimated at $1.581 billion, or $424 million higher than the total $1.156 billion burden on taxpayers.

Posted in Economics, Research | Comments Off on The net fiscal impact of illegal immigrants? New Jersey and Texas studies clash

From 1994 until NAFTA (The American Free Trade Agreement) took effect in 2001, “total trade with Mexico had increased by a factor of 2.3, the number of intracompany transferees crossing the border had risen by a factor of 5.6, the number of temporary workers by a factor of 4.8 and the number of tourists by a factor of 2.9.” This from an article by Douglas Massey, the Princeton professor about whom I have posted before. I read this week an article he wrote, as part of a WESAW course I am taking in my town.
Go here to find the article on migration.
Massey takes a global perspective on immigration: International migrant flows “are intimately connected to broader processes of economic integration that for the past half century have been shrinking the globe.”
Flows of commodities, services and information are matched by flows of people. The industrialized countries are caught in a “contradiction”: they want to globalize everything except the flow of people. America is dead center in this contradiction. As I posted before, we have the largest number of cities with at least one million in foreign born residents, but our politicians are largely fearful of immigration.
“Immigrants arrive because the same processes of globalization that create mobile populations in developing regions and a demand for their services in global cities also create links of transportation, communication politics and cultures to make international migration easier and cheaper.”
— from Great Decisions, 2007 edition, the Foreign Policy Association

The California Commission on Health and Safety and Workers Compensation, a highly visible state agency, has released its study of “Barriers to occupational health services for low-wage workers in California.” This is the largest scope and best investigated study of its kind. I have previously posted on numerous other more limited studies about garment, hotel and meat processing workers, and day laborers. I have copied below the entire Executive Summary.
This study says several important things either explicitly or by omission. First, work safety and access to workers compensation protections are pervasive problems among low wage workers — in particular, immigrant workers. The authors are effectively confirming other studies, in this broad and deep examination.
Second, the authors say by their silence that the California state agency with the greatest practical influence over correcting these problems is, well, useless. The authors appeared to have never even interviewed executives at the massive state run State Compensation Insurance Fund. SCIF is by far the largest workers comp insurer in the state, in fact the largest in the world, and whose seven person board includes three union representatives.
I queried the Commission last summer about why SCIF is not even mentioned. I did not receive a direct answer. I am left with the feeling that one state agency, CHSWC, decided that SCIF was useless as either a source of information or as a agency of work safety and workers comp system improvements.
Who are these low wage workers? The authors write, “Officially, over 3.7 million Californians are employed in occupations whose median wage is less than $10 an hour, the definition used in this report to classify workers as “low-wage.” Perhaps as many as two million more may be employed in California’s expanding underground economy. The majority of low-wage workers are nonwhite and immigrants. Typical low-wage occupations in California include restaurant and food service employees, health aides, cashiers, janitors, hotel cleaners, assemblers, security guards, farm laborers, retail clerks and sewing machine operators, among others.
“Overall, nearly two-thirds of the 25 leading occupations reporting non-fatal work-related injuries and illnesses are low-wage occupations. Heavy physical exertion, exposure to toxic substances and blood borne pathogens, repetitive motions performed bent over or in awkward postures for hours and slips, falls and other accidents are some of the common risk factors.”
The Executive Summary:

The Migration Information Service published this week a study of education, language speaking, and income patterns among Latin American and Asian second generation immigrants in southern California (San Diego) and southern Florida (Miami/ fort Lauderdale). I plucked out of the study some interesting figures on relative educational attainment and income of the family in which the second generation immigrant – usually at their mi 20s – is living.
At the low end of educational attainment and family income are Cambodian and Laotians in southern California and Haitians in southern Florida. In contrast, “At the other end, the combination of high parental human capital, a high proportion of intact families, and a neutral context of reception (as defined above), led second-generation Chinese and other Asians to extraordinary levels of educational achievement, only matched in South Florida by the offspring of upper-middle-class Cuban exiles who attended private schools. Vietnamese youths also did quite well despite low average levels of parental education.”
The schedule below lists the region, the nationality, the percentage of high school students who did not go onto higher education, and the average family income. The educational attainment percentage is the share who did NOT go onto higher ed.
These education figures don’t jibe well with national average. Nationally, about 36% do not go onto higher ed. Higher ed utilization rates are notoriously complicated to estimate. The higher education participation figures by nationality seem much too high. However, I think we can use these figures to
*compare* the nationalities below. Chinese second generation people are most active in higher education among all groups. Cambodians and Laotians have the worst rate for post high school education.
How to read the list below…an example: Among Filipinos in southern California, 2nd generation persons were less inclined to pursue post high school education than were Vietnamese, other Asians and Chinese. The median income of the households in which the second generation resides is, for Filipinos, about $55,000 – much higher than any other listed nationality for that region.
Southern California:
Cambodian, Laotian 45.9%, $25,179
Chinese 5.7% $33,611
Filipino 15.5%, $55,323
Mexican 38% $32,585
Vietnamese 12.6% $34,868
Other, Asian 9.1%, $40,278
Other, Latin American 25.5%, $31,500
South Florida
Colombian 17%, $45,948
Cuban (Private School) 7.5%, $70,395
Cuban (Public School) 21.7%, 48,598
Haitian 15.3%, $26,974
Nicaraguan 26.4% $47,054
West Indian 18.1%, $30,326

Posted in Demographics, Research | Comments Off on Disparities in education, income among second generation immigrants